Mid-year review 2023 - Fintech - Rebounding after the great reset
Fintech companies have initiated a rebound after the 2022 reset in valuations. The banking crisis and the development of generative AI represent tailwinds for the industry.
The year of resurgence powers on
Fundamentals eventually prevail
As most fintech companies have been transitioning from growth at all costs to profitability, investors are slowly considering this new reality. The stocks of new fintech companies have outperformed the price performance of legacy players. The great valuation reset of 2022 has not been erased yet (half of our investable investment universe - which includes both new fintech and legacy players, lost more than -40%, a quarter of it more than -60%), but at least the free fall has stopped, and the trend has reversed.
It is not surprising that legacy fintech, well-established companies, outperformed in 2022, as investors were looking for safe places to hide (although there were none). And it is not surprising that new fintech is outperforming this year, as fundamentals eventually prevail.
Fintech companies put up barriers to entry. As an illustration, we can note the price increases, above inflation, for the core products of companies like Xero (accounting software, in the Fintech portfolio) or Shopify (e-commerce and payment platform, in the Mobile Payments portfolio). These price hikes did not significantly impact their retention rate; despite the competition, demand has become inelastic – at least in the short term. If fintech companies keep innovating, this will remain true also in the long run.
A new fintech wave is brewing
Crises fuel innovation. This is also true for the financial industry. After the global financial crisis of 2007-2008, a series of new business models to digitize financial services appeared. Companies like Stripe and Block emerged from the ashes of the global financial crisis. They leveraged technology to replace banks that had reduced their risk appetite and IT investments.
Central banks have (hopefully) intervened to save the financial system – again. But the consequences of the current banking crisis have not fully materialized yet. While the previous fintech wave focused on financial services for individuals, this crisis is a unique opportunity for fintech companies to develop into financial services for businesses, especially small and medium enterprises.
Such entities, e.g., many startups as per the client breakdown of SVB, were at risk of losing deposits. Services like automated treasury management and cash sweeping (i.e., increasing insured deposits) have bright days ahead.
Fintech and a new era for software
We often say that fintech is more consumer-oriented than our other themes. This is especially true for the challengers, the fintech companies that compete with incumbents. A large part of fintech is also about the technology providers, i.e., the companies that provide software solutions to both the challengers and the incumbents.
Generative AI has made headlines recently. It promises gains in productivity, operational efficiencies and improved customer engagement that will transform all industries. As fintech is about software, it will play a key role in implementing such technology. Early adopters will have a competitive advantage, and all companies will be forced to acquire the latest software solutions. We believe that the expected revenue of software providers across all major fintech verticals (e.g., banking software, accounting software, insurance software, regulatory and compliance software) will benefit from an increased demand (and a surge in orders and billings) for the next 18-36 months.
No pause for digitalization efforts
FedNow is now
The initial launch of the FedNow, a 24/7 instant payment infrastructure developed by the Federal Reserve, is planned for July. Banks and credit unions will play a key role through their own apps and systems to offer this service to end-users. The initial applications will be account-to-account transfers and bill payments.
Traditional financial institutions have a unique opportunity to fill the technological gap they have accumulated against modern payment processing companies that have developed private payment rails. It remains to be seen if banks can reverse the trend regarding the loss of market share in the payment industry. Unlike Square Cash by Block or Venmo by PayPal, FedNow will not work in a closed-loop system.
Banks have no mandate yet to adopt FedNow. But if adoption is high, we believe that all major payment processing companies will add this payment method to their offering. Stripe is officially not working on integrating FedNow, while Block has been part of the pilot phase. We see Zelle, the instant payment system developed by U.S. banks, as the most-at-risk payment solution in the long term, as FedNow will be a direct competitor.
By the way, why do we discuss FedNow in the financial software section instead of in the section related to payments? Because banking software providers are likely to benefit the most initially from the deployment of FedNow, since it will require an update of the core banking systems.
Cutting the settlement cycle
Besides FedNow, banking software providers have another reason to be optimistic. The Federal Reserve announced that the standard settlement cycle will move from (T+2) to (T+1) on 28 May 2024. This will impact all companies in the investment world – including us and our service providers, starting with our custodian banks. Core banking systems, portfolio management systems, and investment operation platforms will all need to be upgraded.
The quest for proactive accounting
The rapid development of automated accounting implies that individuals can spend more time on financial tasks with more added value. In particular, proactive accounting is gaining importance with a focus on data analytics and strategic planning.
Traditional accounting provides a picture of a company at a given point in the past. If software solutions can provide near real-time information on the entire business activity, then the decision-making process can be improved. With the support of cloud-based platforms that rely on machine learning, forecasting business performance across business units becomes accessible to anyone – even for small and midsize businesses.
The old banker in the Age of Disruption
Neobanks’ consolidation will happen
We reiterate our views that neobanks will face financial challenges. With the surge in interest rates, the time of cheap funding is over. Only the banks that have scaled their customer base and their revenue will be able to become profitable quickly enough. With the loss of confidence in the banking system (U.S. commercial banks have experienced a ~$1tn net withdraw from deposits since early March), banks will have to really stand out to attract new clients. The product offering is also crucial; most models that do not rely on a solid lending offering do not seem sustainable. In a sense, neobanks might become collateral damage to the current banking crisis.
More than 95% of the >400 neobanks lose money. We expect many of them will be acquired, merged or go bankrupt. Even in a place like Switzerland, the CEO of Yuh (by Swissquote and Postfinance) expects that only three neobanks will survive. Being selective remains essential; neobanks in our portfolios are already profitable or have clear short-term plans towards profitability, leveraging their network and superior technology.
My advisor is a robot
The wealth management industry could be transformed with the rapid development of large language models like ChatGPT. The upcoming generation of bots will read and synthesize complex reports in a matter of seconds while preparing personalized solutions according to the needs and desires of the clients. At the same time, these bots will be able to execute payments and trades, detect fraud, and respond to various queries from all departments servicing an account.
For the moment, wealth advisors will still be around for interpersonal contacts - not many individuals are ready yet to trust a bot blindly. But with all the automatic support, the number of clients in a book can be doubled or even tripled. It is not a surprise to see a behemoth like JPMorgan developing its own ChatGPT clone (named IndexGPT according to a trademark application), while restricting at the same time the employee use of OpenAI’s ChatGPT.
Apple steps further into banking
While we had described the super-app ambitions (not launched yet) of Twitter in our latest outlook, it is another big tech company that made significant advances in personal finance services this year: Apple! Through a partnership with Goldman Sachs, the firm has launched a new high-yield savings account for Apple Card holders, offering an interest rate of 4.15%.
While most banks are not able to offer attractive rates (due to a mismatch between assets and liabilities), many savers jumped at the opportunity: apparently ~$1bn of deposits have been made in its first four days! The loss of confidence in traditional banks indeed helped, as many people see Apple as the safest company to place funds in – although the actual credit risk is with Goldman Sachs.
It remains to be seen if this will be profitable for the investment bank. But for sure, it can gain market share and individual data in consumer banking, a sector where it failed multiple times (including recently with its consumer bank, Marcus).
Apple also launched a buy now, pay later solution earlier this year. We expect the company to keep expanding its financial services offering.
Navigating through innovation
Increased pressure on credit card issuers
The Consumer Financial Protection Bureau (CFPB) is going after credit card issuers. They will be forced to disclose more information to consumers. In particular, the users must have access to the range of interest rates charged for various credit scores.
Moreover, the CFPB proposed rules to reduce credit card late fees. Credit card issuers collect up to $41 for each missed payment, resulting in credit card late fees of ~$12bn per year. The amount charged does not reflect the actual costs of the issuers. Among the proposed measures, the CFBP wants to reduce the fees to $8, which would decrease late fees by ~$9bn. If approved, this could seriously alter the issuing landscape and some players could even decide to stop the issuing business. If there are fewer credit card offerings, other credit methods, such as buy now, pay later (BNPL) could see a surge in demand.
Paying with the hand
We anticipated in the last outlook a new wave of biometric payment solutions.
During our recent business trip to China, we discovered that facial recognition payments faced some adoption barriers. While this payment method has existed for >5 years, people are unwilling to share a scan of their face or iris with payment processing companies.
Consequently, the Beijing subway system is developing a less intrusive payment method, i.e., reading the palm print and vein mapping. A pilot phase is ongoing on the line to the Daxing airport. The payment is processed through WeChat Pay by Tencent.
In the United States, Amazon’s palm-reading payment technology is being deployed beyond its stores, at a few airports, and in stadiums. Panera Bread has just started deploying Amazon One payment method and expects to have 10-20 locations live by year-end.
Will Chinese consumption rebound?
It is no secret that we have been constructive on China, especially companies active in the domestic market. With a current exposure to China of 15-20% in the Mobile Payment portfolio and 10-15% in the Fintech portfolio, these stocks have had a flattish contribution to the performance of the portfolios so far this year.
The investment case we outlined in the last outlook remains valid and should hopefully materialize in the second semester. Ant Group should receive a fine soon, which is thought to be less than initially feared (actual ~$730mn vs. ~$1bn expected as of late 2022). When a decision is taken in China, it means that the worst is behind and that companies can move forward. In this case, it would imply the end of the regulatory crackdown on Chinese Big Tech. It started with Ant; it shall end with Ant. In parallel, parent company Alibaba is restructuring its corporate structure.
Record household savings have not materialized yet into the “revenge spending” hopes heralded at the beginning of the year. We expect households to benefit from a series of government stimuli to spend this money. Payment processing companies would consequently see a surge in the volume processed.
Will the U.S. be part of the blockchain industry?
U.S. lawmakers must produce a regulatory framework
After the FTX debacle, the Securities and Exchange Commission (SEC) has gone after all blockchain activities on U.S. soil. Contrary to the Commodity Futures Trading Commission (CFTC), which would consider most cryptocurrencies as commodities, the SEC believes that most of them are securities.
Moreover, the SEC thinks that staking should be considered an investment product. Even stablecoins have been targeted. The escalation of the lawsuits by the SEC has been astonishing, targeting first small entities, then larger ones like Kraken or Paxos to eventually end up with the industry leaders, namely Binance and Coinbase. Lengthy court battles are expected.
This mess could have been avoided if the U.S. lawmakers had been more proactive, like in Europe (which finally adopted MiCA) or in Switzerland (which has had a clear regulatory framework about blockchain for years). Blockchain activities are on pause in the United States, as the environment has become too uncertain. This benefits the rest of the world.
But the United States cannot let the blockchain industry go offshore – the long-term damages could be too severe. The U.S. lawmakers will have to quickly provide a comprehensive framework that will also define the responsibilities and the roles of all players, including government agencies.
Bitcoin and Ethereum have not been targeted yet
Lawmakers through new legislation or, in its absence, judges through case law, will have to decide whether cryptocurrencies are securities. If all cryptocurrencies are classified as securities, this will increase the industry’s costs – while providing better investor protection.
In its lawsuits against Binance and Coinbase, the SEC has named 19 different protocols that should have been registered as securities, including Solana, Cardano, or Polygon (a layer 2 protocol to improve Ethereum scalability). But neither Bitcoin nor Ethereum was pointed out.
The impact on our strategy has been limited, as we exited digital assets.
Continuous technological developments for Ethereum
The Ethereum protocol underwent a significant upgrade in April, known as the Shanghai or Shapella upgrade. Validators can now withdraw their staked assets, improving liquidity and the tokenomics of Ethereum.
The next focus for the protocol will be on scaling solutions. Transaction fees remain an issue, especially when the network gets congested. This happened again in April-May 2023 when a series of meme coins increased trading activity.
The next significant upgrade for Ethereum is known as proto-danksharding. Behind this complicated term, the block size on Ethereum will be increased, reducing gas fees (i.e., reducing transaction fees) and making the network more efficient. This development could be live before the end of the year. Next year, full-danksharding should be a reality; Ethereum will then be able to handle >100K transactions per second (more than Visa, and vs. 13-15 transactions per second currently).
Bitcoin miners’ revival
At the same time as the Ethereum network was congested, the Bitcoin network also reached its maximum capacity. This was due to the launch of BRC-20 tokens, some experimental tokens allowing users to mint and transfer fungible tokens on the Bitcoin blockchain.
The transaction fees on the network surged, increasing revenues for Bitcoin miners. And at current prices, we are still well above production costs. The long-term fundamentals have not changed for Bitcoin, and we remain positive on the leading miners. Bitcoin has played its alternative hedge role during the early stage of the banking crisis and should benefit from the upcoming halving of the rewards in early 2024.
The quest for funding
On the verge of a credit crunch?
Following the bank runs on SVB and other regional banks, U.S. banks have become more reluctant to provide credit. In a survey by the Fed, 47% of banks indicated a tightening of credit standards for smaller companies – such a number had not been seen since the global financial crisis (excluding the Covid-19 pandemic period).
As a result, 77% of smaller companies are now concerned about their ability to access capital, according to a Goldman Sach survey of 10’000 companies.
This reminds us of the tightening conditions on personal loans after the global financial crisis. New fintech business models were launched to fulfill the unmet demand. Nowadays, fintech companies have outpaced traditional banks for unsecured personal loans and are aggressively expanding to other types of loans. We will not be surprised if a similar story happens for SMB loans, a segment where technology can make the lending cycle more efficient.
Buy now, pay later: used for everything!
The new regulations for buy now, pay later (BNPL) have not been announced in the United States yet. In the meantime, Australia and the United Kingdom, countries where BNPL has high penetration rates, have moved forward with their own regulations that consider BNPL as credit products (impacting reporting and licensing requirements, among other things). The slowness of U.S. lawmakers sounds like a déjà vu (see the Blockchain section)!
U.S. consumers have been eroding their savings. With the tightening of credit conditions at traditional banks, BNPL appears like a perfect substitute. While people used to rely on BNPL for retail shopping (e.g., apparel, travel, furniture, etc.), groceries have experienced the fastest growth pace for this payment method in early 2023.
Student debt to restart
The U.S. Department of Education expects interest on student debt to restart accumulating on 1 September, with payments resuming in October. As part of the debt ceiling plan negotiated between Biden and the Republicans, there will be no additional extension of the moratorium.
The impact on the U.S. economy remains to be seen. But specialized alternative lenders in refinancing solutions (see SoFi) will likely see a surge in business by year-end.
Favoring technology enablers
Still a focus on growth-at-all-costs
In the last outlook, we mentioned that 2023 would be a make-or-break year. Neoinsurance companies had to prove that they could compete with legacy players.
We can see the glass half full or empty six months later. From a stock market perspective, several neoinsurers have strongly rebounded. The strong correction in 2022 was like a falling-knife as if the market thought all these firms would go out of business. As a result, their valuation levels were interesting at the beginning of the year, and in a market where sentiment improved, these companies experienced some sort of mean reversion.
Revenue is expanding nicely, growing quicker than the whole insurance sector. But profitability remains a concern, especially for companies based in the United States. It will still take years before a neoinsurer can post a profit. In the current macroeconomic environment, we remain selective on insurtech challengers.
A different story for software developers
The contrast between neoinsurance and insurtech technology enablers is important. Private equity companies are looking for the best opportunities in software development. The recent acquisition of Duck Creek at an enterprise value of close to 10x the 2022 sales (with ~20% revenue growth forecasted) highlights the gap with the current market valuations.
Like in banking, insurance companies need to rely on cloud-based, modular, and AI-enriched solutions. The changing risk pools (e.g., with cybersecurity today and soon with autonomous driving) require insurance companies to work with technology partners to mitigate risks.
A healthy pet, a happy owner!
During our recent business trip to China, we were surprised to hear that pet insurance was more expensive than entry-level health insurance for humans. The competition is not as high as for other insurance products, and pet owners want the best for their best friends.
Several challengers (e.g., Lemonade in the United States and ZhongAn Online in China) offer such products. It seems tailored for online channels. Besides a few countries (e.g., in Sweden >50% or in the United Kingdom ~25%), penetration remains very low, i.e. <5%. This is a relatively small market (currently around $5bn), but growing at 20-25% per year, well above the industry rate.
Lessons from SVB
The failure of prudential supervision
The SVB collapse did not only happen because of poor risk management. It also highlights the failure of prudential supervision. The Fed highlighted SVB liquidity and interest-rate modeling weaknesses in November 2021 already, but nothing was done.
We can expect the regulators to be more strict on banks in the future. Stress testing, capital requirements, liquidity risk management, deposit insurance, and accounting principles are likely to be targeted by lawmakers and regulators.
More regulation (and especially more regulatory reporting) will eventually be good for regtech companies, as banks will need to upgrade their systems.
Opening a bank account for a company or a high-net-worth individual is still a lengthy process that often takes several days, if not weeks. As SVB and other banks were collapsing, customers transferred money to safer banks. This crisis will be remembered for the rapidity of the outflows. As rumors spread through social media platforms, orders were facilitated by e-banking solutions.
For sure, some customers of the troubled banks were able to open accounts in hours. Some institutions provided account numbers to these unexpected new clients as quickly as possible; they would bother with the know-your-customer and anti-money laundering checks after the inflows.
This could have been done differently, without accumulating a backlog for compliance teams. AI-based tools that review documentation and application forms, verify the identity of the applicants, or screen sanction lists exist. The banking crisis represents tailwinds for software solutions to automate the onboarding process.
Compliance of investment advices
With the popularity of generative AI, we can expect a series of new robots that will provide investment recommendations – like IndexGPT by JPMorgan (see Wealthtech).
What will happen if these robots start “fabricating” factual information by mixing their training data? Who would be responsible for an investment recommended with fabricated material? Risk and compliance officers are likely to be reluctant to see the mass deployment of such tools – unless regtech software with the ability to verify recommendations and reject fabricated content is also adopted by financial organizations.
A housing market nobody can afford
Refinancing in free fall
With rising interest rates, the housing market in the United States is sluggish. The average 30-year fixed mortgage rate is fluctuating around the 7% mark and the average selling price is down by ~10%.
The most spectacular impact is on the origination of refinanced mortgages. The volume for this year should account for <20% of the (record) volume of 2021. We have cut by ~40% the total addressable market of proptech, as a large proportion is made of mortgages originated by fintech companies. Proptech stocks still expect better days ahead for the real estate market in the United States, but we are closely monitoring its evolution for concrete signs of a turn around.
The impact of generative AI on property listing
Zillow and Redfin, leading real estate listing platforms in the United States, developed plugins for ChatGPT.
The goal of the super bots is to interact with potential customers. Users indicate what type of object they are searching for, with the desired criteria and the price range, and the bots suggest the properties in the databases that match the requirements.
Generative AI will likely become a normal tool for all marketplaces – not only for real estate. While this tool focuses on property searches, we can see future use cases for the overall real estate market (e.g., interactions with tenants, mortgage applications, etc.).
No more hype around finverses
As part of the regulatory crackdown (see Blockchain), the SEC qualified both Decentraland’s and SandBox’ tokens as securities. The floor price of a piece of virtual land has been divided by three since the beginning of the year. The number of active users does not increase. We were expecting a surge in adoption, especially from international brands that has not yet materialized. Still, the industry organized its first event in June, the “Metaverse Beauty Week”, to showcase the future of marketing in the digital worlds.
These platforms aim to increase engagement with customers and prospects, offering immersive experiences. In opposition, a platform like TikTok only offers limited interaction potential. Future will tell if these platforms find their audience – impacting the prices of virtual lands.
One goal, regaining investors’ confidence
The company is on a long-term mission to improve profitability by optimizing operational leverage on the cost side and improving the average revenue per user on the revenue side. In particular, it wants to get rid of this image of a payment solution provider for microentrepreneurs and low-income individuals. Quarter after quarter, the company has been delivering on this promise, improving key metrics. But the investor sentiment strongly shifted after a short report by Hindenburg Research. We debunked this report; but it will take time for the company to regain investors’ confidence.
A roller-coaster ride
The beginning of the year started well. SoFi posted excellent Q4 results, with a surge in deposits, reducing the cost of funding and improving net interest margins. As we anticipated, they forecasted an earlier quarterly net income profitability as soon as for Q4 2023. And then came the banking crisis. SoFi is not a regional bank, but a countrywide bank targeting young people and with >95% of deposits insured. But investors made no distinction and sold anything that had a banking charter. Eventually, the end of the student loan moratorium (SoFi’s historical business activity) was announced in parallel to the debt ceiling, and the stock rallied. The second half of the year looks more promising.
No change in the story
The first quarter of Hundsun Technologies was in line with expectations. However, due to a high seasonality in revenue (Q1 historically accounts for <15% of yearly revenue), it is challenging to make full-year forecasts. The company focuses on improving its profitability and margins, which we appreciate. Financial reforms in China ensure that the long-term drivers of the company are intact, as the financial industry needs to pursue digitization. For the second half, an improvement in the stock market thanks to the government’s stimuli (see Mobile Payments) may encourage asset managers to increase their IT spending.
Not enough surprises
In its last update, GMO Payment exceeded its guidance in terms of revenue, operating profit, and net profit. In particular, strong sales from its payment terminal division helped achieve the results. But it did not adjust accordingly its full-year guidance to reflect the beat, which is probably too conservative. GMO is a cruise liner that keeps delivering an increase of 25% in operating profits, year after year. The stock has been underperforming the broad Japanese market. If we include the year-to-date JPY depreciation, GMO has performed poorly. Investors – including us - seem to have accommodated to the high visibility the management provides and want to be more surprised.
Another shorted payment company
Results for Shift4 have been good. The payment gateway sunset program and the POS system for restaurants are driving revenue growth, while the new verticals (like sports and entertainment) are starting to be fruitful. The stock has recently been penalized for two reasons. First, it was targeted by short-sellers, impacting investor sentiment. And as the company is growing, it is gaining larger clients, affecting its take rate (revenue relative to volume processed). However, the company should be able to deliver >30% revenue growth, with EBITDA growth >45%. As the payment industry is maturing, Shift4 remains an outlier!
A major deception
Looking at the year-to-date performance of Yeahka, we cannot be happy about this pick. The China story has yet to materialize. The market had high expectations about the country’s reopening after the Covid-19 lockdown. We hope the second half of the year will be better, with stimuli from the government to boost internal consumption (see Mobile Payments). At the company level, the firm had started well the year, with a strong acceleration of its in-store e-commerce services (nearing break-even, on a monthly basis) and a surge in merchants. With no significant change in the fundamentals, the price decline can be attributed to a multiple compression. The stock is trading at a discount to its peers, especially the payment companies listed in Mainland China. We closely monitor the evolution of the company.
Perfect execution despite regulatory risk
Coinbase benefitted from the rebound of the cryptocurrencies at the beginning of the year. At a company level, we can note that the company has been delivering above our expectations. Trading volumes are still far from historical levels, but Coinbase is gaining market shares over competitors. The good surprises came from the interest revenues from its participation in the stablecoin USDC and the staking revenues from Ethereum. The future is more uncertain. The SEC is going after the firm. The exchange and the staking services are targeted; a multi-year lawsuit is expected. And USDC is losing market share against Tether (USDT), seen as less at risk of an attack by the SEC since it is mainly based offshore.
A leading miner
Like other Bitcoin mining companies, Riot Platfroms has had a good start to the year, thanks to a surge in Bitcoin prices. With the SVB collapse, Bitcoin acted as a hedge, and an alternative to cash. Riot remains a rare player that is vertically integrated (self-mining, hosting, and supply of electrical engineering for data centers) and with sound financials. The company is EBITDA positive, has no debt and is able to self-finance most of its expansion plan. Up to $200mn of capital expenditures are planned for a new facility, which will be covered by cash and Bitcoin on the balance sheet and from the proceeds of the mining activity. The self-mining hash rate capacity stands currently at 10.6 EH/s, and should reach 12.5 EH/s by the end of the year before nearing 20 EH/s next year. Riot remains our preferred Bitcoin miner.
Despite the rebound of digital assets, the institutionalization of the asset class is facing hurdles, especially in the United States where the regulatory crackdown (see Blockchain) refrains institutions from moving forward. However, the company keeps announcing new partnerships, paving the way for better days. The digital assets on the balance sheet have, without surprise, contributed positively to the first quarter results, allowing the company to post again a net income. This trend will continue, if the crypto spring is confirmed.
Regulations. Buy now, pay later and the blockchain industry are about to be better regulated. This will eventually be good, as companies will have more clarity about how to operate their business activities.
A fine for Ant Group. Once Ant Group will receive its fine, the entire Chinese fintech industry will be able to move forward. The icing on the cake would be new plans for an IPO as early as 2024.
Bitcoin ETF. We reiterate this catalyst already introduced in the previous outlook. The SEC does not want any spot Bitcoin ETF yet; we have stopped counting all the rejected applications. But in June, it is the industry leader, iShares, that sent an application. Coinbase would act as custodian. Let’s see how the SEC reacts.
Big Tech. The new financial services of Apple confirm that the company wants a foot in the financial industry. There is no reason to believe that its competitors will remain passive. These companies have a large user base and the financial resources to fail nine times in a row – the tenth attempt could be the good one.
PSD3. Europe is currently reviewing its PSD2 (Payment Service Directive) regulation. This has been revealed to be an implementation nightmare for payment companies, especially for the regulatory technical standards. A draft of the next directive, PSD3, could be released in the second half of the year – which will likely be full of surprises.
Large neobank bankruptcy. While we expect a consolidation in neobanks, any bankruptcy of a large player may have a negative sentiment impact, weighing on the entire industry.
Companies mentioned in this article
Alibaba (9988); Amazon (AMZN); Ant Group (Not listed); Apple (Not listed); Binance (Not listed); Block (SQ); Coinbase (COIN); Duck Creek (DCT); GMO Payment (3769); Goldman Sachs (GS); Hundsun Technologies (600570); JPMorgan (JPM); Kraken (Not listed); Lemonade (LMND); OpenAI (Not listed); Panera Bread (Not listed); Paxos (Not listed); PayPal (PYPL); Postfinance (Not listed); Redfin (RDFN); Riot Platfroms (RIOT); Shift4 (Not listed); Shopify (SHOP); SoFi (SOFI); Stripe (Not listed); Swissquote (SQN); Tencent (700); Twitter (Not listed); Visa (V); Xero (XRO); ZhongAn Online (6060); Zillow (Z)
- Companies’ reports
- Ernst & Young
- Ethereum Foundation
- Federal Reserve
- Goldman Sachs
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